In The Spotlight

Fueled by unlimited “soft money” donations, Section 501(c) nonprofit groups and Section 527 political organizations spent more than $400 million in the 2008 federal elections. This figure is largely based on CFI’s analysis of Federal Election Commission (FEC) and Internal Revenue Service (IRS) reports. Since public disclosure of 501(c)s’ partisan activities is incomplete, we also analyzed group public statements, press reports, and past spending patterns, and interviewed a number of group representatives.

Until now, just about all we knew about the results of two years of partisan, unlimited “soft money” fundraising by the host committees for the 2008 major party conventions were the names of donors they elected to disclose. With the filing of the first official host committee reports, we now have a complete list of donors and, even more important, we know the amount of cash or in-kind contributions from each donor.

Independent soft money groups, -- organizations that spend unlimited contributions in elections -- are playing significant roles in 2008’s federal races. According to incomplete official and unofficial reports analyzed by CFI, federally oriented 527 and 501(c) groups have already collected or spent around $350 million and are on course to top $400 million.

Party Conventions’ Financiers Have Spent Nearly $1.5 billion on Federal Campaign Contributions and Lobbying Since 2005
In collaboration with the Center for Responsive Politics, CFI has updated its previous analyses of private financing for the upcoming 2008 Democratic and Republican conventions. (Fourth in a series of reports on the 2008 national party conventions.)

A new CFI analysis finds that both Democrats and Republicans are using local “host committees” in Denver and Minneapolis-St. Paul as vehicles for unlimited soft money contributions to their respective 2008 party conventions. This analysis is largely based on documents received from freedom of information requests to Governors and Mayors in Colorado and Minnesota which are excerpted extensively in the report and its appendices.

Soft money groups in the 2008 election are off to a strong start. Federally-focused 527 political organizations raised money in 2007 at a faster clip than in the comparable off year before the 2004 election. And 527 groups have generally adapted to the Federal Election Commission’s post-2004 regulatory restrictions. At the same time, the tighter controls helped spur expanded use of 501(c)(4) social welfare organizations for election purposes. While it is too early to forecast the level of publicly reported soft money financing in the 2008 cycle - 527s for example raised 15% of their 2003-2004 money and 42% of their 2005-2006 funds in the first year of those two-year cycles - soft money groups are poised to play a major role in the 2008 election.1

The Campaign Finance Institute has released a new study (attached), Party Money in the 2006 Elections: The Role of National Party Committees in Financing Congressional Campaigns by Anthony Corrado and Katie Varney.

A new Campaign Finance Institute study of twelve leading interest groups in the last three federal election cycles was unveiled today at a major conference on Nonprofits in Federal Elections at the National Press Club today. The Conference was co-sponsored by CFI and the Urban Institute. The study shows that the groups deploy three different types of organization -- PACs, 527s, and 501(c) advocacy entities -- in their efforts to influence federal elections and public policy.

Early press coverage of Henry M. Paulson, Jr.'s nomination for Secretary of the Treasury has referred to his "hard money" contributions and fundraising, mainly on behalf of Republican party committees and candidates. Far more important however was his 2003 undertaking, along with 11 other fundraisers, to raise "several million dollars each"1 in unlimited "soft money" corporate and individual contributions for the 2004 Republican nominating convention. Mr. Paulson "called around to his colleagues asking them to contribute to the convention's operating budget. As a [finance] co-chairman he personally agreed to help raise $5 million to help pay for the convention, according to the host committee." 2

The Campaign Finance Institute in pleased to announce that its book, The Election After Reform: Money, Politics and the Bipartisan Campaign Reform Act (edited by Michael J. Malbin) is now available from Rowman & Littlefield.

With George W. Bush, John Kerry and Howard Dean rejecting public financing for their 2004 presidential primary campaigns, any serious candidate in 2008 will have to consider doing the same. Yet after analyzing 2004, a politically diverse CFI Task Force has concluded that a sound matching fund system is still very much in the public interest.

Thirty-three of sixty-seven companies known to be donating to the host committee for the Republican Convention also gave over $100,000 in soft money to the Republican Party in either the 2000 or 2002 election cycles. Most (17) of the 33 firms are not headquartered in New York. CFI's analysis is based on the donors listed on the host committee’s website as of August 20, and data on political contributions provided by the Center for Responsive Politics. (See Table 1 for the list of companies donating to the host committee that also made large soft money contributions to the Republican Party)

The 2004 presidential campaign has become the most expensive such contest ever. According to the latest Federal Election Commission reports, total Democratic and Republican receipts amounted to $589 million at the end of June -- a 74% increase over the $339 million raised at the same time in 2000. Interestingly, the Democratic presidential field has raised more than Republican President George Bush: $361 million vs. $228 million.

The Campaign Finance Institute, a nonpartisan institute affiliated with The George Washington University, announces a new feature on its website that will serve as a major resource to journalists covering the Democratic and Republican presidential nominating conventions this summer.

WASHINGTON – In the first election cycle after soft money contributions to national political parties were banned, convention city “host committees” are raising at least $103.5 million in unlimited private donations for the party nominating conventions – twelve times what they raised for the 1992 conventions – with much of it coming from traditional soft money sources.

Individual contributions to major party presidential candidates exploded from $184 million for the 2000 primaries to $316 million in 2004. Of this $132 million increase, $74 million (or 55%) came in amounts of $1,001 or more. (The new campaign finance law raised the amount an individual can give to a federal candidate from $1,000 to $2000). Another $14 million of the increase came from the growing number of straight $1,000 donors – a total of $88 million in new large donor money in 2004.

In comments filed January 28 with the IRS regarding proposed changes in its annual information return (Form 990) for tax-exempt groups, the Campaign Finance Institute (CFI) strongly endorsed expanded disclosure by noncharitable exempt organizations of their affiliations, financial transfers and other transactions. It argued that increased disclosure was essential for voters to be fully informed about who is behind their political candidates.

On September 9, The Campaign Finance Institute held a luncheon forum "Do the FEC's Soft Money Regulations Undermine the Bipartisan Campaign Reform Act?" For those who could not attend the event, a streaming video and transcript are now available on the CFI website.

Vital Statistics on Congress, 2001-2002 by Norman J. Ornstein, Thomas E. Mann and Michael J. Malbin, is now available in print. This year, for the first time, you can get all of that book's campaign finance information online. Co-author Malbin is Executive Director of The Campaign Finance Institute (CFI) as well as a professor of political science at the University at Albany, SUNY. CFI has put all of the book's campaign finance tables and charts on its website, http://www.CFInst.org, together with explanatory notes that are not in the book.